Money According to Air

If I were to tell you ten years ago that GM will go bankrupt in ten years, you probably wouldn't believe me. But it has happened. Even with $19.4 billion in government funding, the company has still been struggling to cut costs and reduce debts. Now with $27 billion in bond debt, GM's only hope for survival was to exchange most of its debt, or $24 billion, for shares of the company. But since it could only offer 10 percent stake in the company, the offer was rejected by bond holders.

Now the company is expected to file for bankruptcy protection by Monday. The hearing is also likely going to, in the words of Washington, give 72.5 percent of the 100-year-old company to U.S. tax payers. Well, let's be realistic here. What they really mean is that the government is going to own over 70% of GM for at least a year, until the company is back in health and can function independently.

What about those bond holders? Well, thanks to the government, they now have until Saturday afternoon to decided whether or not to accept a new deal for 10% of stake in the company...and an option for an additional 15% in option when the company is back in health. Not the best deal by far, and they are already crying foul.

I'm very interested to see what the government thinks it can do that the company's executives haven't already done. I would also like to point out that the government's plan right now is to pretty much start GM from scratch, and let it purchase assets it needs while auctioning off the rest. So saving jobs doesn't seem to be on the top of the administration's list of priorities. It just needs to save GM because it is linked to several other plants and brands throughout the world.

The creditors will be happy...some what. The government will also take on a hefty asset. The tax payers, though, now need to prepare themselves, because they are now responsible for keeping the company afloat.

Let's just hope it is all worth it.